Schroeder draws up EU plan to rival US

26th October 2004, 0 comments

26 October 2004 BERLIN - Reacting to the European Union's failure to forge economic reforms aimed at catching up with the United States, German Chancellor Gerhard Schroeder published a seven-point plan Tuesday for discussion at the bloc‘s summit next week.The most controversial point, outlined by Schroeder in an article in Germany's Handelsblatt newspaper, is Berlin‘s longstanding demand for tax harmonisation in the 25-member European Union.Schroeder has repeatedly expressed displeasure over big corporate

26 October 2004

BERLIN - Reacting to the European Union's failure to forge economic reforms aimed at catching up with the United States, German Chancellor Gerhard Schroeder published a seven-point plan Tuesday for discussion at the bloc‘s summit next week.

The most controversial point, outlined by Schroeder in an article in Germany's Handelsblatt newspaper, is Berlin‘s longstanding demand for tax harmonisation in the 25-member European Union.

Schroeder has repeatedly expressed displeasure over big corporate tax cuts in the new central and eastern European members of the EU.

Whereas German corporate taxes are about 39 percent, the rate in Slovakia is 19 percent and 15 percent in Latvia and Lithuania.

The Chancellor has issued a veiled warning that new EU members cannot expect aid from Brussels for infrastructure if their low tax rates are sucking investment out of countries like Germany.

"For a competitive and attactive Europe we need a domestic market which is as far as possible not influenced by taxes," said Schroeder.

Schroeder‘s other six points include:

- Liberalising energy throughout the 25-nation EU - as is already the case in Germany- so consumers can choose their supplier of electricity and natural gas by 2007.

- Expand cross-border services but take into account special areas which must remained protected in individual member states.

- Merge European arms industries and standarise EU weapons systems.

- Create unified EU corporate standards for contracts to replace the current 25 different national systems of corporate law.

Schroeder‘s proposals follow scathing comments by outgoing European Commission President Romano Prodi who on Monday called EU efforts to catch up with the US economy "a big failure."

Prodi complained that the national veto of EU states had blocked efforts to liberalise Europe since the bloc‘s 2000 Lisbon summit which vowed to make the EU the most competitive region in the world by 2010.

EU leaders are due to discuss moves to bolster the economy at their 4 to 5 November summit in Brussels.